Eisner’s bid for Topps is topped
Upper Deck Co. is looking to seize the upper hand from Michael Eisner.
The trading card company trumped the former Walt Disney Co. chief executive’s bid for venerable bubble gum and card maker Topps Co. with an unsolicited $416-million offer made public Thursday.
Eisner leads an investment group bidding $385 million. So far, he’s holding his cards close to the vest and isn’t commenting.
Upper Deck’s $10.75-a-share move muddies the waters for Topps’ board of directors, the majority of whom have endorsed the $9.75-a-share takeover offer from Eisner’s investment company, Tornante Co., and private equity firm Madison Dearborn Partners.
Topps shares rose 48 cents, or nearly 5%, to $10.26.
Upper Deck, maker of Yu-Gi-Oh! and sports trading cards, initially expressed interest during a 40-day period when Topps was soliciting higher bids. At the time, Topps’ regulatory filings identified Cheyenne, Nev.-based Upper Deck only as “the principal competitor” interested in acquiring its rival.
New York-based Topps ended talks after its investment bank, Lehman Bros., concluded the unnamed party did not have the proper financial arrangements in place to complete the deal, according to Securities and Exchange Commission filings. It also raised questions about whether such consolidation would pass regulatory muster.
Industry observers say Upper Deck’s bid for Topps could be either a serious attempt to corner the sports card market or a way to crawl inside its rival’s books.
“There are two schools of thought,” said Scott Kelnhofer, editor of Card Trade, a monthly trade journal for the sports collectibles industry. “Either they want to dominate the market and this is their best chance to do it or this is an opportunity to stick their nose inside the door and see what’s going on there.”
By all accounts, the sports trading card business is shrinking, as kids are drawn to other diversions such as the Internet and computer games.
Wholesale revenue will reach an estimated $300 million this year, a precipitous drop from one 1992 survey that pegged sales at $1.2 billion.
In an attempt to shore up sales, Major League Baseball eliminated the glut of cards in the market by reducing the number of licensees from four to two -- Upper Deck and Topps.
Sean McGowan, managing director of Wedbush Morgan Securities in New York, said that resulted in a dramatic increase in baseball sales for both companies.
Nonetheless, the industry faces serious challenges. Mike Berkus, one of the founders of the annual National Sports Collectors Convention, said trading cards appeal to a child’s hero worship and love of the game and luck of the draw. But those allures are seemingly losing ground to more sophisticated diversions.
“How can a piece of cardboard compete with an electronic video game?” Berkus said.
dawn.chmielewski@ latimes.com
